THE SMT FUND
PROSPECTUS October 1, 2000
620 Woodmere Avenue, Suite B
Traverse City, Michigan 49686
1-877-SMT-FUND (1-877-768-3863)
The investment objective of The SMT Fund is to achieve a higher total
return over the long term than the total return of the United States equity
markets. The Fund seeks to achieve this objective by following a market timing
strategy. The Fund attempts to be "in the market" (invested in a broad range of
common stocks) when the market is rising and "out of the market" (invested in
money market instruments) when the market is declining.
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
ABOUT THE FUND.............................................................3
HOW THE FUND HAS PERFORMED.................................................4
COSTS OF INVESTING IN THE FUND.............................................5
HOW TO INVEST IN THE FUND..................................................5
HOW TO REDEEM SHARES.......................................................7
DETERMINATION OF NET ASSET VALUE...........................................8
OTHER INFORMATION ABOUT INVESTMENTS AND STRATEGIES.........................9
DIVIDENDS, DISTRIBUTION AND TAXES..........................................9
MANAGEMENT OF THE FUND....................................................10
FINANCIAL HIGHLIGHTS......................................................10
<PAGE>
ABOUT THE FUND
Investment Objective
The investment objective of the Fund is to achieve a higher total
return over the long term than the total return of the United States equity
markets.
Principal Strategies
The Fund seeks to achieve this objective by following a market timing
strategy which is based on a proprietary investment model developed by the
Fund's adviser. The Fund attempts to be "in the market" (invested in a broad
range of common stocks) when the market is rising and "out of the market"
(invested in money market instruments) when the market is declining.
The adviser's market timing strategy uses a proprietary, computer-driven
technical model that generates buy and sell signals. It is designed to take
advantage of rising markets and avoid the risk of declining markets. When the
technical indicators in the model generate a buy signal, the Fund will
substantially invest in a broad range of high quality stocks selected by the
adviser. When the indicators generate a sell signal, the stocks will be sold and
the proceeds invested in money market instruments. The model does not recommend
or select specific securities for purchase or sale by the Fund, but is designed
to generate buy and sell signals for the market as a whole. Because the Fund
often goes in and out of the market, the Fund anticipates that it will have an
extremely high rate of portfolio turnover.
If the strategy is successful, the Fund generally will participate in
rising markets and avoid the risk of declining markets, and should outperform an
equivalent portfolio held through periods of market decline. The Fund will
generally compare its return to that of the S&P 500 and NASDAQ.
In order to minimize certain adverse tax consequences that might arise
because of frequent portfolio turnover, the Fund may, instead of investing
directly in common stock, invest up to 100% of the portfolio in other equity
securities. These other securities include S&P Depositary Receipts ("SPDRs"),
DIAMONDS, NASDAQ 100 Depositary Receipts, and other types of index products.
SPDRs are shares of a publicly traded unit investment trust which owns the
stocks included in the S&P 500 Index, and changes in the price of SPDRs track
the movement of the index relatively closely. DIAMONDS and NASDAQ 100 Depositary
Receipts are similar to SPDRs, but own the securities consisting of all of the
stocks of the Dow Jones Industrial Average and the NASDAQ 100 Index,
respectively. At times, the Fund may invest a significant portion of its assets
in technology companies.
When the Fund is out of the market, the Fund normally will hold all of its
assets in money market instruments (high quality fixed income securities with
maturities of less than one year), securities of money market funds or
repurchase agreements fully collateralized by U.S. government obligations. The
Fund may also invest in such instruments at any time to maintain liquidity.
Principal Risks of Investing in the Fund
The principal risk of investing in the Fund is that the adviser's
market timing strategy will not be successful. At the moment of any buy or sell
signal, the adviser will not know whether that particular signal will turn out
to have indicated the start of a major or minor market move in either direction,
or whether it will prove to be a false signal. The Fund could be exposed to
declining markets and/or could miss a market rise if the adviser's model does
not correctly predict market movements.
In addition, the value of the Fund's shares may decrease in response to the
activities and financial prospects of the individual companies in which the Fund
invests. Equity securities (including index products) are more volatile than
some other investment choices, such as money market funds or U.S. treasury
bills. If the Fund owns an index product that tracks an index that declines in
value, the Fund's shares may lose value.
The Fund may focus its investments in certain industries or group of
industries, such as technology. Stocks within the same industry may decline in
price due to industry-specific market or economic developments.
As the Fund generally will have an extremely high rate of portfolio
turnover, the Fund will incur higher brokerage commissions than those incurred
by a fund with a lower portfolio turnover rate, and the higher turnover rate may
result in the realization for federal tax purposes of more net capital gains,
which may result in substantial ordinary income to shareholders.
If the Fund acquires securities of money market funds, the shareholders of
the Fund will be subject to duplicative management fees.
The Fund's returns will vary and you could lose money by investing in the
Fund
Is the Fund Right for You?
The Fund is designed for long term investors. It may be particularly
appropriate for tax deferred retirement plans because of the tax consequences of
the Fund's high portfolio turnover.
<PAGE>
HOW THE FUND HAS PERFORMED
The bar chart and table below show the variability of the Fund's returns, which
is one indicator of the risks of investing in the Fund. The bar chart shows
changes in the Fund's returns from year to year since the Fund's inception. The
table shows how the Fund's average annual total returns over time (net of fees
and expenses) compare to those of a broad-based securities market index. Of
course, the Fund's past performance is not necessarily an indication of its
future performance.
[bar graph]
--------------------------------------------------------------------------------
Annual Total Returns as of December 31*
SMT Fund: 8.27%
--------------------------------------------------------------------------------
*The Fund's year-to-date return as of September 30, 2000 was -9.13%.
During the period shown, the highest return for a calendar quarter was
7.89% in the 1st quarter of 1999, and the lowest return was -1.11% for the 4th
quarter of 1999.
Average Annual Total Returns for the periods ending 12/31/99:
1 Year Since Inception*
------ ----------------
The Fund 8.27% 19.69%
S&P Index 19.26% 19.25%
*June 5, 1998
COSTS OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)1
Maximum Sales Charge (Load) Imposed on Purchases ...........................NONE
Maximum Deferred Sales Charge (Load)........................................NONE
Redemption Fee..............................................................NONE
Annual Fund Operating (expenses that are deducted from Fund assets)
Management Fees............................................................4.88%
Distribution (12b-1) Fees...................................................NONE
Other Expenses.............................................................0.11%
Total Annual Fund Operating Expenses.......................................4.99%
1 Processing organizations may impose transactional fees on shareholders.
Expense Example:
The example below is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example uses
the same assumptions as other mutual fund prospectuses: a $10,000 initial
investment for the time periods indicated, 5% annual total return, constant
operating expenses, and sale of all shares at the end of each time period.
Although your actual expenses may be different, based on these assumptions your
costs will be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$524 $1, 648 $2,882 $6,526
<PAGE>
HOW TO INVEST IN THE FUND
The minimum initial investment in the Fund is $10,000 ($2,000 for qualified
retirement accounts and medical savings accounts) and minimum subsequent
investments are $100.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check made payable to The SMT Fund, and sent
to the P.O. Box listed below. If you prefer overnight delivery, use the
overnight address listed below:
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U.S. Mail: The SMT Fund Overnight: The SMT Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services,Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
</TABLE>
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. To wire money,
you must call the Fund at 877-SMT-FUND to set up your account and obtain an
account number. You should be prepared at that time to provide the information
on the application by facsimile. Then, provide your bank with the following
information for purposes of wiring your investment:
Firstar Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: The SMT Fund
D.D.A. #488920604
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You must mail a signed application to the Fund's custodian at the above
address in order to complete your initial wire purchase. Wire orders will be
accepted only on a day on which the Fund and the custodian and transfer agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase is accepted by the Fund. Any delays
which may occur in wiring money, including delays which may occur in processing
by the banks, are not the responsibility of the Fund or the transfer agent.
There is presently no fee for the receipt of wired funds, but the Fund may
charge shareholders for this service in the future.
Additional Investments
You may purchase additional shares of the Fund at any time (minimum of
$100) by mail, wire, or automatic investment. Each additional mail purchase
request must contain:
- your name....... - the name of your account(s);
- your account number(s) - a check made payable to The SMT Fund.
Checks should be sent to The SMT Fund at the address indicated
throughout this prospectus. A bank wire should be sent as outlined above. ACH
(Automatic Clearing House) transactions should be established in advance by
contacting the Fund's transfer agent.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
<PAGE>
Tax Sheltered Retirement Plans
Because of the tax consequences of the Fund's investment strategies,
the Fund may be a particularly appropriate investment for tax sheltered
retirement plans, including: individual retirement plans (IRAs); simplified
employee pensions (SEPs); 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Fund's transfer agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Please consult with an attorney or tax
adviser regarding these plans. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the transfer agent.
Other Purchase Information
The Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Fund. If you are already a shareholder, the Fund can redeem
shares from any identically registered account in the Fund as reimbursement for
any loss incurred. You may be prohibited or restricted from making future
purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. There is no charge for wire
redemptions; however, the Fund may charge for this service in the future. Any
charges for wire redemptions will be deducted from your Fund account by
redemption of shares. If you redeem your shares through a broker/dealer or other
institution, you may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to:
The SMT Fund
c/o Unified Fund Services, Inc.
431 N. Pennsylvania St.
Indianapolis, Indiana 46204
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. The Fund may require that
signatures be guaranteed by a bank or member firm of a national securities
exchange. Signature guarantees are for the protection of shareholders. At the
discretion of the Fund or the transfer agent, you may be required to furnish
additional legal documents prior to redemption to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Fund's transfer agent at 877-SMT-FUND. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the transfer agent and the custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
<PAGE>
The Fund or transfer agent may terminate the telephone redemption and
exchange procedures at any time. During periods of extreme market activity it is
possible that you may encounter some difficulty in telephoning the Fund,
although neither the Fund nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption, please call the Fund's transfer agent at (877) SMT-FUND.
Redemptions specifying a certain date or share price cannot be accepted and will
be returned. We will mail you the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund may require you to redeem all of your shares in the Fund on
30 days written notice if the value of your shares in the Fund is less than
$10,000 due to redemption, or such other minimum amount as the Fund may
determine from time to time. An involuntary redemption constitutes a sale. You
should consult your tax adviser concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30 day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Fund.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset
value per share (NAV). The NAV is calculated at the close of trading (normally
4:00 p.m. Eastern time) on each day the New York Stock Exchange is open for
business (the Stock Exchange is closed on weekends, Federal holidays and Good
Friday). The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
OTHER INFORMATION ABOUT INVESTMENTS, STRATEGIES AND RISKS
Over the past eight years, the adviser's model has generated an average of
32 buy signals and 28 sell signals annually. Based on the buy and sell signals,
the adviser's model has been "in the market" an average of 50% of each year and
"out of the market" an average of 50% of each year. The Fund, therefore, can be
expected to have extremely high portfolio turnover, which will result in
significantly greater short term capital gains (or losses) and transaction costs
than funds with lower portfolio turnover. During the fiscal year ended May 31,
2000, the Fund's portfolio turnover was 23,116.67%. Short term gains are taxable
to some shareholders as ordinary income (see "Taxes" below). Therefore, you
should be aware that the Fund's anticipated portfolio turnover may result in
substantial ordinary income to shareholders. Investment through a tax deferred
retirement plan account may be preferable for that reason.
<PAGE>
When the Fund is in the market, the adviser generally intends to stay fully
invested (subject to liquidity requirements) in common stock or other equity
instruments. The Fund normally will invest primarily in common stocks of
companies whose securities, in the opinion of the adviser, are well established
and enjoy an acceptable degree of liquidity, or in shares of index products that
own such common stock. Most equity securities in the Fund's portfolio are listed
on the New York Stock Exchange, the American Stock Exchange or the NASDAQ over
the counter market. The Fund may also invest in preferred stocks and warrants.
Warrants are options to purchase equity securities at a specified price valid
for a specific time period.
To the extent the Fund focuses its investments in a certain industry or
group of industries, the Fund is subject to special risks. For example, in the
technology industry, competitive pressures and aggressive pricing may have a
significant effect on the performance of companies in which the Fund invests.
There is the risk that certain high technology products and services offered by
these companies may quickly become obsolete in the face of new technological
developments. Additionally, investments in companies that offer new products
include the risk that the products will not meet expectations or even reach the
marketplace. The biotechnology industry can be significantly affected by patent
considerations, intense competition, rapid technological change and
obsolescence, and government regulation. Internet companies are subject to a
rate of technological change that is generally higher than other companies,
often requiring extensive and sustained investment in research and development,
and exposing such companies to the risk of rapid product obsolescence. Changes
in governmental policies, such as telephone and cable regulations and anti-trust
enforcement, and the need for regulatory approvals may have a material effect on
the products and services of these companies. In addition, competitive pressures
and changing demand may have a significant effect on the financial condition of
internet companies.
OTHER INFORMATION ABOUT INVESTMENTS, NON-PRINCIPAL STRATEGIES AND RISK
The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which you considered appropriate at the time of your investment in the
Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders every December. These distributions
are automatically reinvested in the Fund unless you request cash distributions
on your application or through a written request. Dividends paid by the Fund may
be eligible in part for the dividends received deduction for corporations. The
Fund expects that its distributions will consist primarily of short term capital
gains.
Taxes. In general, selling shares of the Fund and receiving
distributions (whether reinvested or taken in cash) are taxable events. All
income realized by the Fund, including short term capital gains, will be taxable
to the shareholder as ordinary income. Because distributions of long term
capital gains are subject to capital gains taxes, regardless of how long you
have owned your shares, you may want to avoid making a substantial investment
when the Fund is about to make a long term capital gains distribution. Depending
on the purchase price and the sale price, you may have a gain or a loss on any
shares sold. Any tax liabilities generated by your transactions or by receiving
distributions are your responsibility.
Early each year, the Fund will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax adviser about your
investment.
MANAGEMENT OF THE FUND
The Fund retains Securities Management & Timing, Inc., 620 Woodmere
Avenue, Suite B, Traverse City, Michigan 49686 as the Fund's investment adviser.
Craig M. Pauly is the sole shareholder of the adviser and has served as
President of the adviser since June of 1993. He has been managing equity
accounts using the market timing strategy since January 1, 1992. Mr. Pauly is
responsible for the day-to-day management of the Fund's portfolio.
<PAGE>
The Fund is authorized to pay the adviser a fee equal to an annual average
rate of 4.95% of its average daily net assets, minus the amount by which the
Fund's total expenses (including organizational expenses, but excluding
brokerage, taxes, interest and extraordinary expenses) exceeds 4.99%. The
adviser pays all of the operating expenses of the Fund except brokerage, taxes,
interest, fees and expenses on non-interested person trustees and extraordinary
expenses. For the fiscal year ended May 31, 2000, the Fund paid the adviser a
fee equal to 4.88% of its average daily net assets. The adviser may pay fees to
certain fund consultants based on investments made and maintained by investors
that the consultant has referred to the Fund.
FINANCIAL HIGHLIGHTS
The following table is intended to help you better understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by McCurdy & Associates CPA's, Inc., whose report, along with the Fund's
financial statements, are included in the Fund's annual report, which is
available upon request.
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Year Year
Ended Ended
May 31, 2000 May 31,1999 (a)
----------- -----------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning ................................... $ 12.25 $ 10.00
Income from investment
Operations:
Net investment income ................................... (0.21) (0.22)
Net realized and unrealized
gain (loss) on investments.......................... (0.08) 3.44
----- ------
Total from investment income ............................ (0.29) 3.22
Less distributions:
Dividends from realized gains............................ (6.16) (0.97)
Dividend from net investment income...................... 0.00 0.00
------ ----
Total distribution............................................ (6.16) (0.97)
Net asset value at end of period ............................. $ 5.80 $ 12.25
======= ======
TOTAL RETURN (a).............................................. (7.34)% 33.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period................................ $ 9,233,690 $16,529,990
Ratio of expenses to average net assets (b).................. 4.99% 4.99%
Ratio of net investment income to average net assets:(b)..... (2.30%) (1.94%)
Portfolio turnover ...................................... 23,116.67% 10,710.86%
(a) For the period June 5, 1998 (commencement of operations) to May 31, 1999.
(b) Annualized.
</TABLE>
<PAGE>
INVESTMENT ADVISER TRANSFER AGENT AND ADMINISTRATOR
Securities Management & Timing, Inc. Unified Fund Services, Inc.
620 Woodmere Avenue, Suite B 431 North Pennsylvania Street
Traverse City, Michigan 49686 Indianapolis, Indiana 46204
CUSTODIAN AUDITORS
Firstar Bank, N.A. McCurdy & Associates CPA's, Inc.
425 Walnut Street., M.L. 6118 27955 Clemens Road
Cincinnati, Ohio 45202 Westlake, Ohio 44145
LEGAL COUNSEL DISTRIBUTOR
Brown, Cummins & Brown Co., L.P.A. Unified Financial Securities, Inc.
3500 Carew Tower 431 North Pennsylvania Street
Cincinnati, Ohio 45202 Indianapolis, Indiana 46204
[BACK COVER PAGE]
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Fund at 877-SMT-FUND to request free copies of the SAI and the
Fund's annual and semi-annual reports, to request other information about the
Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI and
other reports) at the Securities and Exchange Commission (SEC) Public Reference
Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and
operation. You may also obtain reports and other information about the Fund on
the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-8687
<PAGE>
THE SMT FUND
STATEMENT OF ADDITIONAL INFORMATION
October 1, 2000
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of The SMT Fund dated October 1, 2000.
This SAI incorporates by reference the financial statements and independent
auditor's report from the Fund's Annual Report to Shareholders for the fiscal
year ended May 31, 2000 ("Annual Report"). A copy of the Prospectus can be
obtained by writing the Fund at 620 Woodmere Avenue, Suite B, Traverse City,
Michigan 49686, or by calling 1-877-SMT-FUND (1-877-768-3863).
TABLE OF CONTENTS
-----------------
PAGE
----
DESCRIPTION OF THE TRUST AND FUND......................................... 2
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS..... 3
INVESTMENT LIMITATIONS.................................................... 3
THE INVESTMENT ADVISER.................................................... 5
TRUSTEES AND OFFICERS..................................................... 6
PORTFOLIO TRANSACTIONS AND BROKERAGE...................................... 6
DETERMINATION OF SHARE PRICE.............................................. 8
INVESTMENT PERFORMANCE.................................................... 8
CUSTODIAN................................................................. 9
TRANSFER AGENT AND ADMINISTRATOR.......................................... 9
ACCOUNTANTS...............................................................10
DISTRIBUTOR...............................................................10
FINANCIAL STATEMENTS......................................................10
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
The SMT Fund (the "Fund") was organized as a diversified series of
Securities Management & Timing Funds (the "Trust") on February 20, 1998 and
commenced operations on June 5, 1998. The Trust is an open-end investment
company established under the laws of Ohio by an Agreement and Declaration of
Trust dated February 20, 1998 (the "Trust Agreement"). The Trust Agreement
permits the Trustees to issue an unlimited number of shares of beneficial
interest of separate series without par value. The Fund is the only series
currently authorized by the Trustees. The investment adviser to the Fund is
Securities Management & Timing, Inc.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the shareholder. Each share of a series represents an
equal proportionate interest in the assets and liabilities belonging to that
series with each other share of that series and is entitled to such dividends
and distributions out of income belonging to the series as are declared by the
Trustees. The shares do not have cumulative voting rights or any preemptive or
conversion rights, and the Trustees have the authority from time to time to
divide or combine the shares of any series into a greater or lesser number of
shares of that series so long as the proportionate beneficial interest in the
assets belonging to that series and the rights of shares of any other series are
in no way affected. In case of any liquidation of a series, the holders of
shares of the series being liquidated will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to that
series. Expenses attributable to any series are born by that series. Any general
expenses of the Trust not readily identifiable as belonging to a particular
series are allocated by or under the direction of the Trustees in such manner as
the Trustees determine to be fair and equitable. No shareholder is liable to
further calls or to assessment by the Trust without his or her express consent.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitiled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights.
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. For
other information concerning the purchase and redemption of shares of the Fund,
see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Determination of Net Asset Value" in the
Fund's Prospectus.
As of September 15, 2000, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: James A. Rakel, 6010
Clough Pike, Cincinnati, Ohio 45244, 9.2%; and Erik R. Portmann, 2534 Millville
Shandon Road, Hamilton, Ohio 45013, 6.6%.
As of September 15, 2000, the officers and trustees as a group may be
deemed to beneficially own less than 1% of the Fund.
<PAGE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objective and Strategies").
Equitiy Securities - Preferred Stock and Warrants. Equity securities in which
---------------------------------------------------
the Fund may invest include preferred stock and warrants. Preferred stock,
unlike common stock, offers a stated dividend rate payable from the issuer's
earnings. Preferred stock dividends may be cumulative or non-cumulative,
participating or auction rate. If interest rates rise, the fixed dividend on
preferred stocks may be less attractive, causing the price of preferred stocks
to decline. Preferred stock may have mandatory sinking fund provisions, as well
as call/redemption provisions prior to maturity, a negative feature when
interest rates decline. Warrants are options to purchase equity securities at a
specified price for a specific time period
Repurchase Agreements. Repurchase transactions are transactions by which the
-----------------------
Fund purchases a U.S. Government obligation and simultaneously commits to resell
that obligation to the seller at an agreed upon price and date. The resale price
reflects the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or maturity of the purchased obligation. A
repurchase transaction involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the underlying
U.S. Government obligation. In the event of a bankruptcy or other default of the
seller of a repurchase agreement, the Fund could experience both delays in
liquidating the underlying U.S. Government obligation and losses. To minimize
these possibilities, the Fund intends to enter into repurchase agreements only
with its custodian, banks having assets in excess of $1 billion and the largest
and most creditworthy (as determined by the Board of Trustees and the Adviser)
securities dealers. In addition, the repurchase agreements will be fully
collateralized by the underlying U.S. Government
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
------------
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a)
--------- ------
from a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are
in an amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities.
------ -----------
This limitation is not applicable to activities that may be deemed to involve
the issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of
--------------
securities issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of portfolio securities
(including restricted securities), the Fund may be deemed an underwriter under
certain federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate.
--------------
This limitation is not applicable to investments in marketable securities which
are secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
<PAGE>
5. Commodities. The Fund will not purchase or sell commodities
------------
unless acquired as a result of ownership of securities or other investments.
This limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except
------
(a) by loaning portfolio securities, (b) by engaging in repurchase agreements,
or (c) by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its
-------------
total assets in any particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
----------------
with respect to the Fund and are
Non-Fundamental (see "Investment Restrictions" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or
---------
in any manner transfer, as security for indebtedness, any assets of the Fund
except as may be necessary in connection with borrowings described in limitation
(1) above. Margin deposits, security interests, liens and collateral
arrangements with respect to transactions involving options, futures contracts,
short sales and other permitted investments and techniques are not deemed to be
a mortgage, pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while
----------
borrowings (including reverse repurchase agreements) representing more than 5%
of its total assets are outstanding. The Fund will not enter into reverse
repurchase agreements.
3. Margin Purchases. The Fund will not purchase securities or
------ ----------
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Options. The Fund will not purchase or sell puts, calls,
-------
options or straddles.
5. Loans. The Fund will not loan its portfolio securities.
------
<PAGE>
THE INVESTMENT ADVISER
The Fund's investment adviser is Securities Management & Timing, Inc.,
620 Woodmere Avenue, Suite B, Traverse City, Michigan 49686 (the "Adviser").
Craig M. Pauly is the sole shareholder and President of the Adviser.
Under the terms of the management agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage, taxes, interest, fees and
expenses of the non-interested person trustees and extraordinary expenses. As
compensation for its management services and agreement to pay the Fund's
expenses, the Fund is obligated to pay the Adviser a fee computed and accrued
daily and paid monthly at an annual rate of 4.95% of the average daily net
assets of the Fund, minus the amount by which the Fund's total expenses
(including organizational expenses, but excluding brokerage, taxes, interest and
extraordinary expenses) exceeds 4.99%. The Adviser may waive all or part of its
fee, at any time, and at its sole discretion, but such action shall not obligate
the Adviser to waive any fees in the future. For the fiscal year ended May 31,
2000 and for the period June 5, 1998 (inception) to May 31, 1999, the Fund paid
fees of $688,893 and $539,107, respectively, to the Adviser.
The Adviser retains the right to use the names "Securities Management &
Timing" and "SMT" in connection with another investment company or business
enterprise with which the Adviser is or may become associated. The Trust's right
to use the names "Securities Management & Timing" and "SMT" automatically ceases
ninety days after termination of the Agreement and may be withdrawn by the
Adviser on ninety days written notice.
Consistent with the Rules of Fair Practice of the National Association of
Securities dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Trust as a factor in the selection of brokers and dealers to execute
portfolio transactions. In addition, the Adviser (not the Fund) may compensate
brokers and other intermediaries for directing assets to or retaining assets in
the Fund. If a bank were prohibited from continuing to perform all or a part of
such services, management of the Fund believes that there would be no material
impact on the Fund or its shareholders. Banks may charge their customers fees
for offering these services to the extent permitted by applicable regulatory
authorities, and the overall return to those shareholders availing themselves of
the bank services will be lower than to those shareholders who do not. The Fund
may from time to time purchase securities issued by banks which provide such
services; however, in selecting investments for the Fund, no preference will be
shown for such securities.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust.
The names of the Trustees and executive officers of the Trust are shown below.
Each Trustee who is an "interested person" of the Trust, as defined in the
Investment Company Act of 1940, is indicated by an asterisk. As of June 30,
1999, the officers and trustees as a group owned less than one percent of the
Fund.
<PAGE>
<TABLE>
<S> <C> <C>
===================================== -------------------------- ==================================================
Name, Age Position Principal Occupations
and Address During Past 5 Years
===================================== -------------------------- ==================================================
Craig M. Pauly * Trustee, President Director and President of Securities Management
620 Woodmere, Suite B and Treasurer & Timing, Inc. since 1993.
Traverse City, MI 49686
1971
===================================== -------------------------- ==================================================
Brian D. Duddles Trustee, Secretary Assistant Vice President of State Savings Bank
P.O. Box 1169 of Frankfort since 7/99; Origination Manager at
Frankfort, MI 49635 Stone Ridge Mortgage from 7/94 to 7/99;
1963 Independent Representative at Royal Alliance, a
broker/dealer, from 1993 to 1994.
===================================== -------------------------- ==================================================
Jeffrey T. Nowicki Trustee Partner at Lamothe & Nowicki, an advertising
25 W. Michigan Avenue company, since 7/97; Partner at Partners
Suite 801 Advertising, an advertising company, from 1/95
Battle Creek, MI 49017 to 7/97; Economic Development Special Projects
1966 Director at Cereal City Development Corporation
from 7/92 to 1/95.
===================================== ========================== ==================================================
Dr. Mark Gulow Trustee Director of North Flight, a medical emergency
401 Peninsula Knolls and air transportation company, from 7/93 to
Traverse City, MI 49686 present.
1955
===================================== ========================== ==================================================
</TABLE>
Trustee fees are Trust expenses. The compensation paid to the Trustees of
the Trust for the fiscal year ended May 31, 2000 is set forth in the following
table.
================================ ============================================
Total Compensation from Trust
Name (the Trust is not in a Fund Complex)
================================ ============================================
Craig M. Pauly $0
================================ ============================================
Brian D. Duddles $3,000
================================ ============================================
Jeffrey T. Nowicki $3,000
================================ ============================================
Dr. Mark Gulow $3,000
================================ ============================================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
<PAGE>
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
When the Fund and another of the Adviser's clients seek to purchase or sell
the same security at or about the same time, the Adviser may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Adviser, taking into account such
factors as the size of the individual orders and transaction costs, when the
Adviser believes adjustment is reasonable. Transactions of advisory clients
(including the Fund) may also be blocked with those of the Adviser. The Adviser
will be permitted to participate in the blocked transaction only after all
orders of advisory clients (including the Fund) are filled.
The Trust and the Advisor have each adopted a Code of Ethics under Rule
17j-1 of the Investment Company Act of 1940. The Code significantly restricts
the personal investing activities of all employees of the Advisor. The Code
requires that all employees of the Advisor preclear an acquisition of any
securities in an initial public offering or private placement. The preclearance
requirement and associated procedures are designed to identify any substantive
prohibition or limitation applicable to the proposed investment. In addition, no
employee may purchase or sell any security which at the time is being purchased
or sold, or to the knowledge of the employee is being considered for purchase or
sale, by the Fund. The substantive restrictions provide for trading "blackout
periods" which prohibit trading by portfolio managers of the Fund within periods
of trading by the Fund in the same (or equivalent) security. The restrictions
and prohibitions apply to most securities transactions by employees of the
Advisor, with limited exceptions for some securities (such as securities that
have a market capitalization and average daily trading volume above certain
minimums).
For the fiscal year ended May 31, 2000 and the period June 5, 1998
(inception) to May 31, 1999 the Fund paid brokerage commissions of $731,158 and
$281,902, respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Determination of Net
Asset Value" in the Prospectus.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return."
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
(over the one, five and ten year periods) that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
<PAGE>
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates, and that a complete redemption
occurs at the end of the applicable period. If the Fund has been in existence
less than one, five or ten years, the time period since the date of the initial
public offering of shares will be substituted for the periods stated.The Fund's
average annual total returns for the fiscal year ended May 31, 2000 and for the
period June 5, 1998 (inception) to May 31, 2000 were -7.34% and 11.12%,
respectively.
Nonstandardized Total Return
----------------------------
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
From time to time, in advertisements, sales literature and information
furnished to present or to prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, M.L. 6118, Cincinnati, Ohio
45202, is Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT AND ADMINISTRATOR
Unified Fund Services, Inc., 431 North Pennsylvania Street, Indianapolis,
Indiana 46204, acts as the Fund's transfer agent and, in such capacity,
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of the
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. In addition, Unified Fund Services, Inc.,
in its capacity as fund administrator and fund accountant, provides the Fund
with certain monthly reports, record-keeping and other management-related
services. For its services as administrator, Unified Fund Services, Inc.
receives a monthly fee from the Adviser equal to an annual average rate of 0.08%
of the Fund's average daily net assets, subject to an annual minimum fee of
$17,500. For its services as fund accountant, Unified Fund Services, Inc.
receives a monthly fee from the Adviser equal to an annual average rate of 0.07%
of the Fund's average daily net assets, subject to an annual minimum fee of
$17,500. For the fiscal year ended May 31, 2000 and for the period June 5, 1998
(inception) to May 31, 1999, the Adviser paid Unified Fund Services, Inc., on
behalf of the Fund, $17,500 and $15,082.64, for fund administration services,
respectively, and $17,500 and $15,082.64 for fund accounting services,
respectively.
<PAGE>
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, has been selected as independent public accountants for
the Trust for the fiscal year ending May 31, 2000. McCurdy & Associates CPA's,
Inc. performs an annual audit of the Fund's financial statements and provides
financial, tax and accounting consulting services as requested.
DISTRIBUTOR
Unified Financial Securities, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, is the exclusive agent for distribution of shares
of the Fund. The Distributor is obligated to sell shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis. Unified Management Corporation
and Unified Fund Services, Inc. are wholly owned subsidiaries of Unified
Financial Services, Inc.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to
be included in this Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended May 31, 2000. The Funds will provide the Annual Report without charge at
written request or request by telephone.
